ALJ/ANG/tcg Mailed 8/3/2000
Decision 00-08-021 August 3, 2000
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of Pacific Gas and Electric Company
for Authority to Establish Post-Transition Period Application 99-01-016
Electric Ratemaking Mechanisms. (U 39-E) (Filed January 15, 1999)
Application of San Diego Gas & Electric Company
for Authority to Implement Post Rate Freeze
Ratemaking Mechanics. (U 902-E) to Review and Application 99-01-019
Recovery Transition Cost Balancing Account (Filed January 15, 1999)
Entries from January 1, 1998 through June 30, 1998
and Various Generation-Related Memorandum
Account Entries.
Application of Southern California Edison
Company (U 338-E) to: (1) Propose a method to Application 99-01-034
Determine and Implement the end of the Rate (Filed January 15, 1999)
Freeze; and (2) Propose Ratemaking Mechanisms
which would be in place after the end of the Rate
Freeze Period.
Application of SAN DIEGO GAS & ELECTRIC
COMPANY: (1) informing the Commission of the
Probable Timing of the End of its Electric Rate
Freeze, (2) for Authorization to Change Electric
Rates Through Implementation of Interim Application 99-02-029
Ratemaking Mechanisms Concurrent with (Filed February 19, 1999)
Termination of the Electric Rate Freeze, and (3) for
Authorization to Change Electric Rates by Adding
New, and Revising or Terminating Existing, Rate
and Revenue Mechanisms and Rate Designs.
(U 902-E)
(See Decision 99-10-057 for Appearances.)
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OPINION REGARDING EMERGENCY MOTION
FILED BY UTILITY CONSUMERS’ ACTION NETWORK
Summary
On July 6, 2000, the Utility Consumers’ Action Network (UCAN) filed and
served an Emergency Petition to Modify Decision (D.) 99-05-051 (Petition).
Consistent with the ruling of the assigned Administrative Law Judge (ALJ),
parties filed and served responses on July 14.1 In this decision, we grant UCAN’s
motion in part, deny it in part and implement several provisions designed to
mitigate the summer rate spikes experienced by the customers of San Diego Gas
& Electric Company (SDG&E). We have considered the proposed rate freeze.
We have a duty to protect the public interest and do not intend to exacerbate
future high energy bills by short-sighted actions now. Instead, we use the
refunds of the rate reduction bond unrealized savings and the amortization of
the Transition Cost Balancing Account (TCBA) to offset high bills. In addition,
we recognize that wholesale electric markets are not workably competitive and
begin an investigation to consider the impact of wholesale electric market on
retail rates in SDG&E’s service territory.
1SDG&E filed and served its response on July 11. The Office of Ratepayer Advocates
(ORA), Federal Executive Agencies (FEA), California Manufacturers & Technology
Association (CMTA), the Alliance for Retail Markets (ARM), the California Power
Exchange (CalPX), and the California Streetlighting Association (Cal-SLA) filed and
served comments on July 14. SDG&E moved to file a supplemental response on July 14.
That motion is granted. On July 17, The City of San Diego moved to intervene and file
comments and Edison moved to file late-filed comments. Each of these motions is
granted. On August 1, 2000, the Western Manufactured Housing Communities
Association (WMHCA) filed a motion to intervene, and a motion to accept its late-filed
comments to the draft decision and alternate. Due to the late timing of WMHCA’s
comments, the Commission has not had adequate time to consider the motions and the
comments to the draft decisions. Accordingly, the two WMHCA motions are denied.
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UCAN’s Petition
UCAN filed its Petition in response to considerably increased prices to
SDG&E’s customers in June and July. A combination of heat waves across the
West, a drop in reserves, and significantly increased demand have resulted in
much higher wholesale energy costs. The Independent System Operator (ISO)
has declared several emergencies this summer which have led to voluntary
curtailments and rolling outages. The ISO Board of Governors recently voted to
drop its price cap from $750 per megawatt2 to $500 per megawatt and then to
$250 per megawatt in an effort to control prices. Because ratepayers in SDG&E’s
service territory are no longer subject to a rate freeze, these consumers are subject
to price volatility.
UCAN characterizes the high rates faced by consumers as “dire and
unprecedented” and requests that the Commission impose a summer rate freeze
for residential, small commercial, and lighting customers for August, September,
and October 2000 and allow SDG&E to establish a balancing account to track
uncollected revenue. UCAN also requests that a follow-up proceeding be
initiated in November 2000 to assess the size and recovery of the undercollection;
to reconsider D.00-06-034 and approve the settlement related to procurement
proposed by SDG&E, UCAN, and the Office of Ratepayer Advocates (ORA); to
accelerate the process by which SDG&E can give residential and small
commercial customers who so request special meters that allow them to receive
price credits for not consuming electricity during peak periods; and to redirect
2In the ancillary services market, there are price caps for both capacity (megawatt) and
imbalance energy (megawatt-hour). The same cap applies to both capacity and
imbalance energy.
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more of the $350 million in annual expenditures on energy efficiency programs
to the San Diego area. In addition, UCAN requests that the Commission direct
the Energy Division to conduct an investigation as to the cause of the summer
price increase, with any generators found to have engaged in price gouging to be
required to pay for a portion of the rate increase.
In D.99-05-051, the Commission adopted a settlement regarding the end of
SDG&E’s rate freeze. The settlement allowed SDG&E to cap its residential, small
commercial, and lighting customers rates at levels not to exceed 112.5% of frozen
electric rate levels on an average monthly basis for the months of July, August,
and September, 1999. The settlement also provided that SDG&E would not
propose a similar rate cap for the year 2000 in this proceeding.
The Commission recently adopted D.00-06-034 in these proceedings.
Pacific Gas and Electric Company (PG&E) proposed that price caps be adopted
in order to mitigate the volatility in energy prices once the rate freeze ends.
Southern California Edison Company (Edison) and SDG&E did not make similar
proposals. With the exception of California Streetlighting Association (Cal-SLA),
all other parties opposed price caps, stating that such devices would dilute
market prices and distort market signals. In D.00-06-034, we determined that
consumers must be aware of the price signals provided by the market and
rejected PG&E’s rate capping proposal:
We prefer that customers understand the impact of the market
and the accompanying price signals. We call for the utilities
and ESPs to provide the necessary customer education and
information and recommend that hourly interval meters be
installed whenever feasible. We also continue the balanced
payment plan for residential and small commercial customers.
We do not require that such plans be expanded to street
lighting customers, but instead see this as an opportunity for
the marketplace to offer solutions. (Id., mimeo. at p. 4.)
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UCAN did not address whether its proposal required a modification to
D.00-06-034. The ALJ’s ruling specifically asked parties to comment on the need
to modify that decision.
SDG&E’s Responses
In general, parties do not support UCAN’s proposal for price caps, but
support other aspects of UCAN’s Petition. SDG&E proposes a series of short-
term and longer-term measures to address the impacts of rising rates on
customers. SDG&E maintains that, as provided in D.00-06-034, residential and
small commercial customers will receive refunds for the unrealized bond savings
that resulted from the early end to the rate freeze. Customers will receive these
refund checks in August and the typical residential customer will receive a
refund of $260. The net effect of high summer bills and receipt of the refund
check results in projected benefit of $90 to customers compared to last summer.
SDG&E also proposes to develop installment plans for paying the summer bills,
defer payment of half the electric bill until customers receive refund checks from
the unrealized bond savings, and to expand marketing of balanced (or levelized)
payment plans. SDG&E offers to act as an aggregator for customers to enable
them to bid their load to the lowest-priced energy service provider (ESP) and
joins UCAN in its call for an investigation of energy markets. SDG&E agrees that
the Commission should expedite the deployment of real time meters and
recommends that permitting and siting authority for new generators be
streamlined and accelerated.
SDG&E states that the rate freeze proposed by UCAN does not provide a
solution to high electric prices – or to high customer utility bills, for that matter.
SDG&E’s levelized payment plan (LPP) already allows consumers to smooth
monthly bill fluctuations, with a true-up paid at the end of each calendar year.
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In contrast, SDG&E believes that UCAN’s proposal will encourage customers to
consume more electricity during peak demand, rather than less, because
regulation will insulate customers from the market. In addition, UCAN’s
proposal could lead to higher winter bills, because ratepayers will be paying for
the rate deferral at a time when natural gas usage and bills are high. SDG&E
states that adopting UCAN’s proposal requires a modification of D.00-06-034 and
that cannot be done without providing parties “notice and an opportunity to be
heard as provided in the case of complaints,” as is required by Pub. Util. Code
§ 1708.3 SDG&E specifically calls for evidentiary hearings to determine the total
amount of energy costs to be deferred, how the shortfall would be paid for and
amortized, and the impacts on customers.
In its supplemental response, SDG&E proposes an immediate summer bill
credit for all customers in addition to the bond refund that residential and small
commercial customers receive. SDG&E proposes that the overcollection
resulting from recovery of its ongoing transition costs be credited to customers
over August and September. Transition costs and related revenues are tracked in
the Transition Cost Balancing Account (TCBA). As of July 13, SDG&E calculates
that its TCBA is overcollected by $90 million. As of August 1, SDG&E expects
the overcollection to be approximately $100 million. Normally, this
overcollection would be amortized into rates in 2001.
Because the commodity prices exceed the fixed prices for energy of
SDG&E’s portion of the San Onofre Nuclear Generating Station (SONGS)
(determined to be approximately 4.3 cents per kilowatt-hour (kWh), SONGS
3 Statutory references are to the Pub. Util. Code, unless otherwise noted.
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energy has generated higher revenues than anticipated.4 Similarly, expenses (or
above-market costs) and revenues are calculated for SDG&E’s Qualifying
Facilities (QF) contracts and its long-term contracts with Portland General
Electric and Public Service of New Mexico. The Competition Transition Charge
(CTC) rate component was set for 2000 using certain PX forecasts that have
turned out to be lower than the actual PX prices. There are no above market
costs for these power purchase contracts for this time frame and this results in
accrued revenue to offset transition cost recovery.5 As of May 31, SDG&E reports
that the overcollected balance in the TCBA was $38.4 million; when SDG&E
closed its books for June, the balance was approximately $90 million. Thus, the
commodity price spikes have caused this account to more than double in a
matter of weeks. SDG&E projects that with current PX prices, the TCBA
overcollection will be approximately $100 million on July 31.
Other Parties’ Positions
FEA and CMTA do not oppose UCAN’s rate cap so long as any customer
not subject to the cap does not have to bear any costs associated with the
recovery of such a rate deferral. CMTA, however, believes that the LLP provide
the same benefits without impacting market signals.
4The TCBA is a complicated balancing account composed of several sub-accounts and
memorandum accounts. Costs and revenues related to SONGS are tracked in a sub-
account. When revenues exceed costs, those revenues are credited to the TCBA and
offset transition cost recovery. When costs exceed revenues, those costs are debited to
the TCBA and increase the ongoing transition costs to be recovered.
5Like SONGS, costs and revenues related to power purchase contracts are calculated in
a sub-account, as explained in Footnote 4.
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ORA agrees that without a significant disallowance of any shortfall or
amortization over a lengthy period, UCAN’s proposal will only forestall, rather
than eliminate, high bills for SDG&E customers. ORA agrees with SDG&E’s
analysis that increased prices for gas and normal increased natural gas
consumption in the winter, along with amortization of an electric price
undercollection will lead to significantly higher combined electric and gas bills
and associated customer complaints. ORA believes that the refund of unrealized
rate reduction bond savings will help to mitigate the rate shock to small
customers. ORA agrees with SDG&E’s assessment that the average SDG&E
residential customer will end up about $90 ahead of last summer, in terms of
cash flow.
While ORA agrees that a rate cap is contrary to D.00-06-034 and that
consumers should have the opportunity to respond to price signals, ORA is also
concerned that the market is not workably competitive. Thus, ORA supports
both UCAN and SDG&E’s call for an investigation into the commodity price
increase. ORA, however, recommends that the Attorney General’s office is better
suited to conduct such an investigation, because the Commission does not have
jurisdiction over the merchant generators. ORA points out that PG&E and
Edison have the incentive to maximize headroom under the rate freeze rather
than to drive up prices. ORA is also hesitant regarding SDG&E’s proposal for
universal installation of real-time meters, because both cost-effectiveness and
impact on competition should be considered. ORA supports expanded or
redirected energy efficiency funds but will respond to the utilities’ proposals in
Application (A.) 99-09-049 et al., as called for in D.00-07-017. ORA counsels
against SDG&E acting as an aggregator for small customers, since this may again
impact competition in a negative fashion.
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ORA recommends that the Commission open a quasi-legislative
investigation or rulemaking into facilitating more stable rate options to
customers and rate design for default service.
PG&E maintains that instituting a rate cap for SDG&E requires a specific
fact-finding inquiry, but states that the rate capping proposal made in the post-
transition ratemaking proceeding is not designed to address the issues at hand.
Both ARM and the CalPX suggest that hedging (i.e., allowing participants
to manage risk through purchases and sales of electricity and energy-related
products on a forward basis) will help to solve this problem. Both parties note
that SDG&E has filed Advice Letter (AL) 1234-E for expanded authority to
purchase in the PX’s Block Forward Market. ARM also notes that the recent
price spikes occurred during late spring and early summer when many
generating units were out of service for maintenance in anticipation of hotter
weather in the later summer months.
Cal-SLA supports UCAN’s petition regarding rate caps and redirecting
energy efficiency funds. Cal-SLA also supports SDG&E’s LPP and requests that
D.00-06-034 be modified to expand the LPP to small commercial and street-
lighting customers for SDG&E, PG&E, and Edison.
Edison points out that the problem, when properly viewed, is one of a
statewide concern. Edison also states that UCAN's immediate rate cap offers a
temporary respite from high bills, at potentially greater cost later and therefore,
opposes the proposal. Edison expresses concern with a Commission
investigation into causes of high summer prices, if it does not investigate all facts
and remedies of all market participants. Anything less than this will be an
incomplete and potentially ineffectual approach to solving the problem. Edison
believes that it is important to coordinate with FERC and the EOB and that the
Commission should request that FERC initiate an investigation.
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Edison also concurs with SDG&E's July 11 response that suggests that the
Commission should continue and accelerate the June 29th load profiling
workshops and increase its emphasis on energy efficiency and load profiling.
The Commission should direct the use of the public goods charge funds into
those programs which it determines have the most quantifiable and immediate
impact on price volatility. The Commission should order a study to determine
which customers will benefit from hourly metering. The Commission should act
quickly on SDG&E's advice letter regarding the installation of more hourly
meters.
The City of San Diego requests that the Commission to take the leadership
in developing solutions to solve the short term and the long-term problems. City
of San Diego does not support the UCAN proposal as currently structured, but it
does support the following suggestions: 1) improving the availability of time of
use meters for residential and small commercial customers; 2) encouraging
SDG&E to aggressively pursue development of new energy efficient programs in
the San Diego area; and 3) investigating the root causes of the high and volatile
prices in California. City of San Diego expresses concern with the repercussions
of an investigative approach, in that this may have the unintended effect of
thwarting investment.
Discussion
As UCAN and SDG&E demonstrate, SDG&E’s procurement costs and
rates to bundled customers have skyrocketed in recent months, resulting in
typical residential bills that have increased over 70% since last summer’s.
Natural gas prices are also also increasing at a record rate. The price of natural
gas during the winter of 1999-2000 was approximately 22 cents per therm.
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Currently the price of natural gas is 45 cents per therm, approximately double
last winter’s price.
In view of that fact, and considering that San Diegans pay a combined bill
for electric and gas, we are not prepared to endorse UCAN’s proposal to defer a
portion of summer electric bills into the winter months, or to reinstitute a rate
ceiling in a manner that might cause higher total bills than necessary. ORA and
SDG&E have demonstrated that this is a possibility. While we are concerned
about the extraordinary hit that San Diegans have already taken this summer
and are eager for the price impacts to be limited, we are not sure the remedy lies
with this Commission. In addition, SDG&E raises legal hurdles associated with
the filed rate doctrine that must be considered.
One of our concerns are the jurisdictional issues that remain open in
relation to FERC. The filed rate doctrine prohibits the “trapping” of costs, that
occurs when a state commission exercises “…its undoubted jurisdiction over
retail sales to prevent the wholesaler-as-seller from paying the FERC-approved
rate….” Nantahala Power and Light Co. v. Thornburgh, 476 U.S. 953,970 (1986).
Its potential application in the San Diego situation poses novel legal and factual
issues that we should explore with the FERC. We call on the FERC to work with
us to resolve the outstanding jurisdictional questions about these options and to
explore possible workable solutions to high prices from the retail and wholesale
sides of the market. We recognize that the FERC recently opened an
investigation into electric bulk power markets and we intend to work in tandem
with them to settle jurisdictional issues and correct market design problems that
may be driving high prices.
We recognize that workable competition does not currently exist in the
wholesale electric markets, and that we should consider promptly options which
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are within our jurisdiction to assist retail customers in managing the wholesale
rate components within retail bills.
We intend to implement short-term approaches that will provide bill
stability over August, September, and October, while we begin to address
failures in current wholesale markets. First, we will grant SDG&E’s request in
AL 1237-E to amortize the overcollection in the TCBA over a two-month period
to all customers.6 This approach, combined with the refund of the rate reduction
bond unrealized savings, will mitigate the immediate impact of the summer rate
spikes.
ORA agrees with the general concept of using the TCBA overcollection to
mitigate summer rate increases. However, ORA recommends that $80 million be
amortized in August and September, rather than the entire amount of
approximately $100 million as SDG&E proposes. ORA believes that a lesser
amount should be amortized to mitigate subsequent increases in rates. It notes
that the CTC rate component will likely increase after the amortization period
ends, and that the trust transfer amount credit to residential and small
commercial customers’ rates will be eliminated. Additionally, ORA points out
that SDG&E’s projections show that combined electric and gas bills are expected
to be even higher this winter. For these reasons ORA recommends that some of
the $100 million that SDG&E proposes to amortize over the next two months be
used to moderate gas and electric rate increases expected in the future. While
6 The protest period was shortened on ALs 1234-E and 1234-E-A and well as AL 1237-E.
James Weil and Aglet Consumer Alliance (Aglet) protested AL 1234-E and 1234-A
requesting that the Commission express its intent to continue oversight of utility
purchases of electric power and ancillary services. ORA filed comments on AL 1237-E.
ARM filed comments in support of the advice letters. No other protests were filed.
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ORA’s points are well taken, the severity of the summer rate spikes warrants
amortizing the entire TCBA overcollection to mitigate high electric rates in
August and September.
We will also authorize SDG&E to expand the LPP to streetlighting
customers. We believe the record supports this modification to D.00-06-034
without further evidentiary hearings. SDG&E’s LPP is available to both
residential and non-residential customers and in hearings on the underlying
issues, SDG&E offered to expand these programs to lighting customers. Because
we have held hearings on these underlying issues, it is reasonable to modify
D.00-06-034 to expand these programs to streetlighting customers.
SDG&E has acknowledged that it has discretion to work with customers
who need to pay their bills in installments. SDG&E has also stated that it has
modified its collection procedures to ensure that no customer will have his or her
service disconnected pending receipt of the lump-sum bond refund check. We
will hold SDG&E to these promises and further order that no customer have
service disconnected as a result of the summer price spikes.
Second, we will grant SDG&E expanded authority to participate in the
CalPX Block Forward Market. SDG&E requested this authority in ALs 1234-E
and 1234-E-A. We granted PG&E and Edison similar authority in Resolutions
E-3658, E-3666, and E-3667, and SDG&E should also be able to fully participate in
hedging opportunities. It is reasonable to grant this authority by this decision
rather than in a separate resolution. Therefore, we approve ALs 1234-E and
1234-E-A. The Commission will continue to oversee utility procurement
practices. We have previously determined that prices paid by utilities in
procuring from authorized wholesale markets are reasonable. (D.00-06-034,
Finding of Fact 11, mimeo. at pp. 88-89.) We also put SDG&E on notice that it is
obligated to procure energy and serve bundled customers on just and reasonable
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terms. We direct the Energy Division to monitor SDG&E’s purchases and report
to us on a monthly basis. We will consider these reports in the Order Instituting
Investigation (OII) discussed below. SDG&E must immediately identify any
markets in which its affiliates or subsidiaries operate and in which SDG&E
intends to procure electricity or ancillary services. SDG&E shall so inform us by
way of a compliance advice letter, to be served on all parties of record in this
proceeding.
Third, as requested by UCAN and endorsed by SDG&E and ORA, we will
issue an Order Instituting Investigation (OII) to investigate these problems and
to determine what must be done to protect small customers in the future. The
OII will be categorized as quasi-legislative, as ORA recommends and, at a
minimum, will focus on the following issues to consider the impact of wholesale
market problems on retail rates:
a. What default rate design options should be provided to
residential and small commercial customers? Should
levelized payment plans be the default option, with an
“opt-out” plan for those customers that so desire? If SDG&E
continues to accrue overcollections in the TCBA, should a
surcredit approach be implemented?
b. Should SDG&E be authorized to participate in bilateral
contracts outside the CalPX day-ahead, day-of, and block
forward markets and the Independent System Operator
(ISO) real-time market?7 How should the Commission
7 We believe this approach is allowed. Section 355.1 states: “The commission may
investigate issues associated with multiple qualified exchanges. If the commission
determines that allowing electrical corporations to purchase from multiple qualified
exchanges is in the public interest, the commission shall submit its findings and
recommendations to the Legislature on or before June 1, 2001. Prior to June 1, 2001, the
commission may not implement the part of any decision authorizing electrical
corporations to purchase from exchanges other than the Power Exchange. That portion
of any decision of the commission adopted prior to January 1, 2001, but after June 1,
Footnote continued on next page
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assess the reasonableness of such procurement activities?
Are SDG&E’s purchasing activities serving bundled
customers on just and reasonable terms?
c. Should SDG&E be released from its default provider
obligation? What impact will this have on consumers? 8
d. Should SDG&E be allowed to act as an aggregator for small
customers to bid their load to the lowest energy service
provider, including SDG&E’s unregulated affiliate, Sempra
Energy Trading? What affiliate transaction rules are
applicable?
Fourth, we endorse SDG&E’s proposals to expand outreach and education
efforts, particularly the LPP, to its customers. SDG&E should ensure that this
plan is as “user friendly” as possible and should ensure that customers can sign
up with little formality. SDG&E’s LPP is available to both residential and small
commercial customers, thus, business customers will also be able to benefit from
this plan. We approve of the summer energy-assistance fund for low-income
customers that will be funded by shareholders. We will investigate whether an
expansion of such a plan is required. Energy efficiency and conservation efforts
will become increasingly important. As discussed in D.00-07-017, we will review
proposals for energy efficiency funds and the Summer Initiative on an expedited
basis. In that decision, we ordered the utilities to propose programs to achieve
demand and energy usage reductions and to use energy efficiency funds that are
2000, authorizing electrical corporations to purchase from multiple qualified exchanges,
may not be implemented.”
8Section 365.5 states that: “Nothing in this chapter shall prevent the commission from
exercising its authority to investigate a process for certification and regulation of the
rates, charges, terms, and conditions of default service. If the commission determines
that a process for certification and regulation is in the public interest, the commission
shall submit its findings and recommendations to the Legislature for approval.”
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not currently budgeted for these efforts. These proposals were filed at the
Commission by July 21 and SDG&E has $12 million in additional funds available.
We will consider SDG&E’s application for the deployment of real time meters,
which we hereby order SDG&E to file within 30 days from the effective date of
this decision. We will address the many issues associated with metering in that
proceeding. We will also consider SDG&E’s application for a Certificate of
Public Convenience and Necessity (CPCN) for the Valley-Rainbow transmission
line as expeditiously as possible, in a manner that is consistent with the law and
public interest.
Finally, we join UCAN, SDG&E, and ORA in their call for an investigation
into market irregularities. UCAN recommends an investigation by the Energy
Division. SDG&E recommends that the PX, ISO, this Commission, and the
Federal Energy Regulatory Commission (FERC) conduct the investigation. ORA
recommends that this Commission join together with the Attorney General to
investigate high electricity prices, with prosecution for any unlawful market
abuses. As part of the OII described above, we begin our investigation and will
determine how best to coordinate with other agencies. We also call for the
cooperation of the Energy Oversight Board in investigating the functioning of the
PX and ISO markets.9
It is important to begin to resolve these issues now. No later than
March 2002, the rate freeze will be over for PG&E and Edison. If the ISO and PX
markets continue to exhibit signs of manipulation or design flaws, we will have
9 CMTA states that a starting point for such an investigation should be formal reports
issued by the Market Surveillance Committees of the PX and ISO. We join this call and
intend to take official notice of any such reports.
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failed to serve Californians. While we must act to assist San Diego ratepayers by
reducing the monthly bills they now face, the larger challenge is to preserve
long-term ratepayer protections and to achieve long-term benefits in an
appropriately-functioning marketplace.
Comments on Draft Decision
Rule 77.7 of the Commission’s Rules of Practice and Procedure provides
for public review and comment for draft decisions, consistent with the provisions
of § 311(g). Normally, draft decisions are subject to a 30-day “sunshine” period
and the same public review and comment period that is required for proposed
decisions. Rule 77.7(f) allows the Commission to reduce or waive the period for
public review and comment for draft decisions under various circumstances. 10
Rule 77.7(f)(9) specifically provides for an exemption:
For a decision where the Commission determines, on the
motion of a party or on its own motion, that public necessity
requires reduction or waiver of the 30-day period for public
review and comment. For purposes of this subsection, “public
necessity” refers to circumstances in which the public interest of
the Commission adopting a decision before expiration of the
30-day review and comment period clearly outweighs the
public interest in having the full 30-day period for review and
comment. “Public necessity” includes, without limitation,
circumstances where failure to adopt a decision before
expiration of the 30-day review and comment period would
place the Commission or a Commission regulatee in violation of
applicable law, or where such failure would cause significant
harm to public health or welfare. When acting pursuant to this
subsection, the Commission will provide such reduced period
10Under most of these circumstances, public review and comment on alternate
decisions may be reduced but not waived.
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for public review and comment as is consistent with the public
necessity requiring reduction or waiver.
Pursuant to Rule 77.7(f)(9), we determine that public necessity requires a
reduced period for public review and comment. In particular, there is a need to
provide bill stability over August and September in the face of the rate spikes
currently being experienced by SDG&E customers. Comments on the draft
decision were filed and served on July 27, 2000. No reply comments were
allowed. Comments were filed by SDG&E, PG&E, Edison, UCAN, ORA, FEA,
CMTA, The Utility Reform Network (TURN), California Industrial Users (CIU),
James Weil, PX, Automated Power Exchange, Department of General Services,
ARM, Western Power Trading Forum, Shell Energy Services, LLC (Shell) 11,
California Farm Bureau Federation, and National Energy Marketers Association
(NEM)12.
Findings of Fact
1. UCAN’s motion to re-institute the rate freeze for SDG&E for the months of
August, September, and October could lead to unintended consequences and
higher winter bills.
2. UCAN’s proposal should be examined and evaluated in the context of the
OII order we vote upon today in order to determine the jurisdictional and
practical implementation of a solution.
11Shell filed a motion to intervene, stating that it has an interest as a member of ARM
and as a marketer of gas and electric services. This motion is granted, but we will not
broaden the issues considered in this decision, consistent with Rule 54.
12NEM is not a party to these proceedings. We accept these comments but direct NEM
to file a motion to participate pursuant to Rule 54.
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3. We hereby call on the FERC to work with us on the outstanding
jurisdictional issues that remain and cooperate on possible retail and wholesale
solutions to high prices.
4. It is reasonable to grant SDG&E’s request to amortize the overcollection in
the TCBA over a two-month period to all customers. This approach, combined
with the refund of the rate reduction bond unrealized savings, will mitigate the
immediate impact of the summer rate spikes.
5. SDG&E’s LPP is available to both residential and non-residential
customers.
6. It is reasonable to grant SDG&E the same expanded authority to
participate in the CalPX Block Forward Market that is available to PG&E and
Edison, as well as the additional authority requested in ALs 1234-E and
1234-E-A.
7. We will issue an OII to investigate these market problems and to
determine what must be done to protect small customers in the future. We call
for cooperation from the Attorney General, the Electricity Oversight Board, the
ISO, and the PX in investigating market irregularities, and will review potential
remedies at FERC.
8. We endorse SDG&E’s proposals for expanded outreach and customer
assistance, as described in this decision.
Conclusions of Law
1. It is reasonable to modify D.00-06-034 to expand LPPs to lighting
customers, including those on Schedule A-TC.
2. Advice Letters 1234-E, 1234-E-A, and 1237-E should be approved in this
decision.
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3. The Commission should continue to oversee procurement practices.
SDG&E must procure energy for its bundled service customers at just and
reasonable terms.
4. Pursuant to Rule 77.7(f)(9), we determine that the public necessity of
providing bill stability in the face of current price spikes requires a reduced
period for public review and comment.
5. This order should be effective today, so that these provisions may be
implemented expeditiously.
FINAL ORDER
IT IS ORDERED that:
1. The Emergency Petition to Modify Decision (D.) 99-05-051 filed by The
Utility Consumers’ Action Network (UCAN) is granted in part as described
herein.
2. San Diego Gas & Electric Company’s (SDG&E) request to amortize the
overcollection in its Transition Cost Balancing Account (TCBA) is granted.
Advice Letter 1237-E is approved.
3. SDG&E shall not disconnect service from any customer as a result of the
summer price spikes. This requirement shall be in effect for August, September,
and October, at a minimum. If necessary, SDG&E shall file an advice letter to
implement these tariff changes, no later than five days after the effective date of
this decision.
4. SDG&E is granted expanded authority to participate in the California
Power Exchange’s Block Forward Market. This authority is consistent with that
granted to Pacific Gas and Electric Company and Southern California Edison
Company. Advice Letters 1234-E and 1234-E-A are approved. The Energy
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Division shall monitor SDG&E’s purchasing practices and report to the
Commission on a monthly basis. This information shall be considered in the
Order Instituting Investigation described in Ordering Paragraph 6. SDG&E shall
fully cooperate in this effort. Within five days of the effective date of this
decision, SDG&E shall file and serve a compliance advice letter to inform us of
any markets in which its affiliates or subsidiaries operate and in which SDG&E
intends to procure electricity or ancillary services.
5. SDG&E shall expand its levelized payment plan program to lighting
customers, including those customers on Schedule A-TC, and shall ensure that
all customers can easily enroll in such a plan.
6. Within 30 days of the effective date of this decision, SDG&E shall file an
application addressing the deployment of real time meters.
7. Simultaneously with this decision, we shall issue an Order Instituting
Investigation (OII) to investigate problems associated with the market and to
determine what must be done to protect small customers in the future.
This order is effective today.
Dated August 3, 2000, at San Francisco, California.
LORETTA M. LYNCH
President
HENRY M. DUQUE
JOSIAH L. NEEPER
RICHARD A. BILAS
CARL W. WOOD
Commissioners
I will file a partial concurrence and a partial dissent.
/s/ HENRY M. DUQUE
Commissioner
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D.00-08-021
Commissioner Henry M. Duque, concurring in part and dissenting in part:
Today’s decision orders a modest measure of relief for the high electric bills that
San Diegans now face. In particular, it approves an immediate distribution of $100
million dollars in bill rebates to San Diegans and permits SDG&E greater authority to
purchase power. These are welcome measures and therefore I can support this decision.
I concur in part because I believe that in many respects, today’s decision does not
go far enough. The decision fails to adopt a Levelized Payment Plan today, but instead
offers only the promise of a study and hearings. Instead of holding hearings to resolve
bilateral procurement issues in September, today’s decision sweeps them into a
comprehensive Order Instituting Investigation, I.00-08-002. Instead of taking comments
that would permit the Commission to determine in September whether utilities should be
free to pursue bargains anywhere they can find them, neither this decision nor the
companion I.00-08-002 offers hope of changing the regulatory chains that tie our utilities
to dysfunctional power exchanges. Instead of focusing on the steps that the Commission
can take now to investigate wholesale markets and power exchanges, this decision defers
action into the comprehensive and certainly slow I.00-08-002. Thus, although I can
support the actions that today’s decision takes, I find that it misses important
opportunities. For this reason, I concur in order to note my dissatisfaction with the
timidity of today’s decision.
I also dissent in part because on one important issue today’s decision fails to take
a clearly needed action. Today’s decision fails to resolve the main issue brought to the
Commission by UCAN’s emergency petition – the call for a retail rate-freeze. The
record developed in this proceeding makes it clear that a retail rate freeze will only lead
to high winter bills. Therefore, we should respond to UCAN’s petition with a firm
rejection. Instead, this decision defers this issue to I.00-08-002. This further study will
both waste Commission resources and deflect energy from the main task of fashioning
workable solutions to the energy crisis. For these reasons, I must note my dissent with
the irresolution of today’s decision concerning this matter.
For these reasons, I must respectfully concur in part and dissent in part.
_____/s/ HENRY M. DUQUE .
Henry M. Duque
Commissioner
August 3, 2000
San Francisco